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Ciena says it’s taking market share from Huawei

Ciena sees a year of “outsized revenue growth” ahead

Telecom networking company Ciena says that it is taking market share in network infrastructure from embattled Chinese vendor Huawei, primarily in Europe and India, where Ciena saw 13% year-over-year growth.

Ciena President and CEO Gary Smith said on the company’s recent quarterly call that in those two geographic areas, Ciena has been “an ongoing move [by carriers] to migrate their dependency … away from Huawei on the optical transport side and in other areas. And we’re getting more than our fair share of that. … We think that’s going to continue over the next one to three years.”

Ciena’s fiscal fourth quarter of 2021 was its first-ever billion-dollar quarter for revenues, which came in slightly ahead of expectations at $1.04 billion, up 25.7% from the same period last year. Its orders outpaced its revenues for the third quarter running, and the company ended its fiscal year with its highest-ever backlog, at $2.2 billion.

Net income for the fiscal fourth quarter was $103.5 million, up from $65 million during the year-ago period. For Ciena’s full fiscal year 2021, net income was $500.2 million, up from $361.3 million for fiscal year 2020.

“Demand remains very strong, driven by increasing bandwidth needs, the shift to the cloud, and also the focus on edge applications as well as digital transformation and a growing need for network automation,” Smith said on the call.

In the year ahead, the company expects “a year of outsized revenue growth” between 11-13%.

While company executives said Ciena isn’t immune to various supply chain challenges that are having impacts around the globe, they said that it is managing those constraints well and that’s reflected in its performance. Still, Ciena expects supply chain issues to persist through at least mid-2022.

Among other highlights from Ciena’s quarterly call:

  • A dozen new contract wins in routing and switching, including “significant multiyear deals with two of the largest U.S. Tier 1 service providers, one of which is for a nationwide 5G cell site router deployment,” according
  • Closing on a deal with AT&T to acquire its Vyatta virtual routing and switching technology. Smith said this acquisition will “help strengthen our Adaptive IP capabilities and increase our exposure to certain 5G use cases.”
  • A partnership with Samsung to pair Ciena solutions with Samsung’s 5G RAN and core equipment to support 5G networks.
  • Ciena’s software automation business, Blue Planet, grew revenues 23% during the year to $77 million; Smith said that some of its customer wins this year include BT and Vodafone, as well as “a major U.S. Tier 1 service provider and large U.S. [cable] MSO.” Smith said that Blue Planet is deployed at 30 of the largest global carriers around the world.
  • The company is leaning on its expertise in optical networks and investing to be able to “offer a new architectural approach” for metro and edge use cases.
  • Non-telco revenue was 41% of Ciena’s total revenues for the year, Smith noted; the company also had more than a billion dollars in orders from web-scale customers. Ciena’s top 10 customers for the year included three U.S. service providers, two international service providers, one cable company and all four of the major web-scale companies, Smith said.
  • CFO Jim Moylan said in response to a question from an analyst that Ciena has been “very active” in internally considering acquisitions; however, he went on, “We just have not been able to find something that worked for us. We hope to be able to do that.”

ABOUT AUTHOR

Kelly Hill
Kelly Hill
Kelly reports on network test and measurement, as well as the use of big data and analytics. She first covered the wireless industry for RCR Wireless News in 2005, focusing on carriers and mobile virtual network operators, then took a few years’ hiatus and returned to RCR Wireless News to write about heterogeneous networks and network infrastructure. Kelly is an Ohio native with a masters degree in journalism from the University of California, Berkeley, where she focused on science writing and multimedia. She has written for the San Francisco Chronicle, The Oregonian and The Canton Repository. Follow her on Twitter: @khillrcr

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